Is In-House Order Fulfillment Right for Your Business? (2025)

Why Fast and Reliable Shipping is Crucial for Your Business

Fast and reliable shipping can significantly impact your customer experience. Research shows that over 60% of online shoppers are more likely to make a purchase when they see shipping speed estimates at checkout. Additionally, 40% of customers would stop ordering from a business after experiencing a late delivery.

Order fulfillment plays a vital role in your customers’ satisfaction, regardless of the size of your business. The question then arises, should you handle order fulfillment in-house?

This comprehensive guide will help you determine if in-house order fulfillment is the right choice for your business and provide you with steps on how to get started.

Understanding In-House Order Fulfillment

In-house order fulfillment involves managing the entire order fulfillment process internally. This includes tasks such as receiving and storing inventory, tracking inventory levels, processing orders, picking and packing orders, shipping orders, tracking orders, processing returns, and managing customer service.

Depending on the size of your business and order volume, you can operate shipping and delivery operations from various spaces like a small office, garage, warehouse, or any suitable location.

Advantages of In-House Order Fulfillment

While managing your own fulfillment process requires time and effort, it offers you control over a critical aspect of your customer experience. Here are some key benefits to consider:

Complete Control over Fulfillment Process

Having control over every step, from storing inventory to shipping orders, allows you to offer faster shipping times, process orders accurately, and create personalized packaging experiences for your customers. You can also handle products that require special care and address issues promptly.

Flexibility to Adapt Quickly

With in-house fulfillment, you can make adjustments to your process based on your business needs. This flexibility is particularly valuable during the early stages of your business or when dealing with unique products that have special shipping requirements. You have the freedom to test new packaging methods, modify shipping options, and scale operations as needed.

Potential Cost Savings

Many businesses find in-house fulfillment to be more cost-effective than using a third-party logistics provider. Even after factoring in expenses for warehouse space, packaging materials, shipping costs, insurance, and basic equipment, managing fulfillment internally can lead to savings.

Challenges of In-House Order Fulfillment

While in-house order fulfillment provides complete inventory control, it can strain your supply chain management resources and daily operations. Here are the primary challenges you may encounter:

Complex Daily Operations

Running your own fulfillment involves managing multiple aspects such as tracking inventory levels, coordinating picking and packing, and handling returns while maintaining accuracy. As your order volume increases, the risk of errors like shipping to incorrect addresses or packing wrong items also rises.

Difficulty in Scaling

Expanding your fulfillment operation requires significant investment in terms of space, staff, and equipment to meet growing demand. These changes can create temporary bottlenecks that may slow down your existing operation. Each growth phase necessitates careful planning to uphold service quality.

Resource and Time Demands

In-house fulfillment demands constant attention from you and your team, starting from the setup phase and continuing through daily operations. Time spent on fulfillment translates to less time available for core business activities like marketing, sales, and product development.

Before opting for in-house fulfillment, it’s essential to consider the full investment required. Calculate costs for equipment, software, packaging materials, shipping, staff training, storage space, and insurance in relation to your order volume.

Implementing In-House Order Fulfillment

1. Set up your storage space
2. Prepare your equipment
3. Develop your fulfillment strategy
4. Plan your workflow
5. Build your team
6. Establish shipping procedures
7. Monitor and optimize operations

If you’re ready to handle order fulfillment internally, follow these steps to kickstart your operations:

1. Set up your storage space

Choose a dedicated area for inventory management and order processing based on your order volume and product requirements.

2. Prepare your equipment

Equip your workspace with essential tools like shelving, packing materials, a shipping label printer, and potentially a barcode scanner and warehouse management software for efficient order tracking.

3. Develop your fulfillment strategy

Compare shipping rates, calculate costs for various shipping options, set prices, establish quality control measures, define order cutoff times, and create a clear returns policy.

4. Plan your workflow

Map out each step of your fulfillment process, including inventory management, order picking, packing, shipping, and handling returns. Utilize pick lists and packing slips to enhance accuracy and efficiency.

5. Build your team

Hire and train staff according to your order volume, ensuring everyone understands the fulfillment process, safety protocols, and customer service standards.

6. Establish shipping procedures

Integrate your store with shipping software for streamlined label printing and tracking. Consider lightweight packaging alternatives to reduce shipping costs.

By following these steps, you can effectively implement in-house order fulfillment and enhance your customer experience.

Enhance Order Fulfillment Process for Efficient Shipping

Streamlining the order fulfillment process is crucial for speeding up shipping and ultimately improving customer satisfaction. By selecting relevant packages quickly during the shipping label buying process, staff can expedite fulfillment. Many shipping carriers offer predetermined box sizes with flat-rate shipping, allowing you to identify the smallest suitable box size for common product combinations. This proactive planning helps reduce shipping costs and ensures efficiency in fulfillment operations.

Utilizing Shopify Shipping can further optimize the process by providing access to discounted carrier rates and seamless fulfillment directly through your store’s admin, without any additional apps or fees.

Monitor and Optimize Regularly

Regularly monitoring key performance indicators such as order accuracy, shipping times, inventory turnover, and customer feedback is essential for optimizing the fulfillment process. By assessing these metrics regularly, you can identify bottlenecks and areas for improvement, leading to reduced costs and enhanced efficiency over time.

Returns Management in Order Fulfillment

Efficient returns management is crucial for customer retention and cost control, as 80% of shoppers avoid repeat purchases after a negative returns experience. With Shopify’s built-in returns management tools, you can streamline the entire process from your store admin, including self-serve returns, automated tracking notifications, refunds, store credit options, exchanges, and automatic inventory updates.

Strategies to Streamline Picking and Packing

Improving accuracy and speed in the fulfillment process can be achieved through various strategies:

Prioritize Expedited Shipping

Ensure rush orders are given priority to meet delivery promises, utilizing the order management system to filter orders by shipping speed.

Optimize Warehouse Layout

Organize the warehouse layout by storing top-selling items closest to picking stations and grouping similar products together to reduce search times.

Use Efficient Picking Methods

Implement batched order picking to gather multiple orders in one trip, reducing travel times. For higher volumes, consider wave picking to divide teams into groups for efficient order processing.

Utilize Barcodes and RFID Tags

Enhance efficiency with barcodes and RFID tags to quickly retrieve product information, quantities, and storage locations, improving inventory management and order accuracy.

Integrating Order Fulfillment with Your Ecommerce Platform

Complete visibility into the order fulfillment process is essential for error-free operations and customer satisfaction. By integrating order fulfillment technology with your ecommerce platform, such as Shopify’s Orders tab, you can centralize order management from multiple sales channels, update inventory levels, purchase discounted shipping labels, add tracking data, and manage customer returns seamlessly.

In-House Order Fulfillment FAQ